Chicago’s Only Black-Owned Bank Sees Increase in Business

Illinois Service Federal Bank in Bronzeville
Illinois Service Federal Bank in Chicago's Bronzeville neighborhood. Lee Bey / WBEZ
Illinois Service Federal Bank in Bronzeville
Illinois Service Federal Bank in Chicago's Bronzeville neighborhood. Lee Bey / WBEZ

Chicago’s Only Black-Owned Bank Sees Increase in Business

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Chicago’s last remaining black-owned bank has seen an increase in customers opening new accounts since the city’s only other black-owned bank was shut down last month. 

But Monica Thomas, executive vice president of Illinois Service Federal Bank in Bronzeville, doesn’t necessarily see the increased business as a positive. 

“We have always been a clear supporter that black banks are needed in every community,” she said.

The South Side lost its other black-owned bank when the Illinois Department of Financial and Professional Regulation shut down Seaway Bank and Trust Company in January.

Seaway was taken over by State Bank of Texas, a company under Indian-American ownership. State Bank of Texas retained the Seaway name, but long-time customers are questioning if community-based operations will remain the same.

Seaway customer Gwen Hicks said she planned to withdraw all her money and close her account. She said she would start banking at Illinois Service Federal.

“I definitely want to keep our money in our community and not in Texas,” she said. “Texas isn’t going to do anything for our South Side streets, our neighborhood.”

Sushil Patel, president of State Bank of Texas told Crain’s Chicago Business that he understands some depositors want to bank with an institution that’s putting money back into the community. State Bank of Texas declined to be interviewed by WBEZ. 

Despite State Bank of Texas being a minority-owned operation, Viveca Ware of Independent Community Bankers of America said there will be cultural differences.

Ware said minority-owned banks don’t necessarily translate from one to the next.

“It’s really amazing to sit there and listen to the cultural difference and how they need to modify their operations to address to provide meaningful services to those communities,” Ware said.

With change in ownership at Seaway, Ware said there are now 23 black-owned banks in the U.S., a 52 percent decline since 2001.

“If the community is suffering in an economic downturn, then the bank is going to be, likewise,” she said. “It’s far more difficult for an African American bank to raise capital than many of the other minority banks.”

Ware also said investors are hesitant to invest because they’re uncertain about the return on investment.

Thomas said Illinois Service Federal has also felt the effects of economic downturns. While the bank was never in danger of closing, last year it needed to raise capital to keep up operations. The bank was sold to the Ghanaian-American Nduom family to keep it black-owned.

Thomas said Illinois Service Federal is in stable condition and is considering expanding. She welcomes new clients, but challenged people to do more than make a small deposit.

“What we ask them to do is actually engage with us, partner with us and participate with us and help us to grow,” Thomas said.

Jonathan Jackson of the Rainbow PUSH Coalition added that many black communities were targeted for subprime loans. He said the FDIC should take into account areas where there was discrimination in lending.

“When you lose your banking, that vital organ, now you’ve lost opportunities for economic growth and expansion. And it’s a resource and a reservoir for small businesses,” he said. “So we do need community banking back in the community in order to be viable economically.”

Jackson said there’s an advantage for the community when bank owners come from the same place. He said families and small businesses get better loans and tailored services that are rare at big banks.

Susie An is a reporter at WBEZ. Follow her on Twitter at @soosieon.